Correlation Between Alibaba Group and BARNETT INC

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Can any of the company-specific risk be diversified away by investing in both Alibaba Group and BARNETT INC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alibaba Group and BARNETT INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and BARNETT INC, you can compare the effects of market volatilities on Alibaba Group and BARNETT INC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alibaba Group with a short position of BARNETT INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and BARNETT INC.

Diversification Opportunities for Alibaba Group and BARNETT INC

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Alibaba and BARNETT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and BARNETT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BARNETT INC and Alibaba Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alibaba Group Holding are associated (or correlated) with BARNETT INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BARNETT INC has no effect on the direction of Alibaba Group i.e., Alibaba Group and BARNETT INC go up and down completely randomly.

Pair Corralation between Alibaba Group and BARNETT INC

Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 1.22 times more return on investment than BARNETT INC. However, Alibaba Group is 1.22 times more volatile than BARNETT INC. It trades about -0.03 of its potential returns per unit of risk. BARNETT INC is currently generating about -0.08 per unit of risk. If you would invest  21,900  in Alibaba Group Holding on February 27, 2022 and sell it today you would lose (12,559)  from holding Alibaba Group Holding or give up 57.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy74.4%
ValuesDaily Returns

Alibaba Group Holding  vs.  BARNETT INC

 Performance (%) 
      Timeline 
Alibaba Group Holding 
Alibaba Performance
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Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Alibaba Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alibaba Price Channel

BARNETT INC 
BARNETT Performance
0 of 100
Over the last 90 days BARNETT INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BARNETT INC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Alibaba Group and BARNETT INC Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alibaba Group and BARNETT INC

The main advantage of trading using opposite Alibaba Group and BARNETT INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, BARNETT INC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BARNETT INC will offset losses from the drop in BARNETT INC's long position.
The idea behind Alibaba Group Holding and BARNETT INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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